Look out for Medicaid!
Although state tax collections are on the rise, and have returned to 2008 levels in many places, education advocates shouldn’t kid themselves that the “new normal” of flat budgets and tough resource allocation decisions will soon come to an end. Spending on health care entitlements continues to grow rapidly, according to the National Association of State Budget Officers’ most recent report, while K-12 education loses ground as a share of state budgets.
The education reform community needs to think beyond the next levy referendum when it comes to providing resources to our schools. Health care reform — specifically, containing the cost of entitlements like Medicare and Medicaid — has become a major issue impacting American schools. While a few forward-thinking groups like the Massachusetts Business Alliance for Education have grasped this and become active on health care policy in their state capitals, it’s not on most people’s agendas.
Yet the simple arithmetic is unavoidable: Medicaid can’t continue to grow faster than the long-term growth rate of the economy without sucking up more and more of state budgets. Education aid necessarily suffers under any scenario where government continues to pay for rapid, unchecked increases in entitlement spending.
The political reality is equally stark: The AARP and other lobbying groups for recipients of state-financed medical care are very good at protecting these entitlements, and deficit hawks usually form a lonely minority in opposing their demands. Bipartisan reform efforts are beginning to emerge at the federal level, but they won’t get far if no one makes the case for spending tax dollars wisely and investing heavily in young people.
— Chris Tessone
Update: Please see Sherman Dorn’s correction below. I regret the error!
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About the Editor
Bernard Lee Schwartz Policy Fellow
Chris Tessone was a Bernard Lee Schwartz Policy Fellow and the Director of Finance of the Thomas B. Fordham Institute. He has strong interests in governance and education finance, especially teacher compensation and school facilities finance.
June 13, 2013